Reports say consumers are upbeat, but the economic outlook remains mixed
While the University of Michigan's early May survey of consumer confidence showed American consumers remain upbeat (a score of 94.2 remains unchanged from late April), there are indications that increasing concerns over high gasoline prices and continued Iraq turmoil could bring positive economic energy to a screeching halt.
The year certainly started off on a rosy note, with the first-quarter sales reported by the National Retail Federation -- www.nrf.com -- up 9.8 percent in the GAFS category which includes general merchandise stores, clothing and clothing accessory stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores. Home merchandise sales remained strong through April, but clothing sales dropped 2 percent, dragging April sales for the GAFS category down .5 percent from March numbers.
Economists are worried that as gasoline prices continue to climb, consumer spending will decline.
Regionally, the West experienced the largest dip in April GAFS numbers, down .7 percent followed by the South at .5 percent, the Northeast at .5 percent, and the Midwest at .4 percent.
Economists report that they did expect the dip in April retail sales simply because March experienced unusual growth due to unseasonably warm weather pushing up gardening-related sales, and an increase in construction activity which boosted building supply sales. Year-over-year, sales numbers are still up overall by 7.6 percent.
To get a sense for where the market is heading, the SNEWSÂ® team has assembled a few reports for your reading pleasure:
Consumer Confidence: The Conference Board publishes a monthly report based on a mail-in survey sent to approximately 5,000 households. Results of the survey are a gauge of the consumer spending mood and are very closely watched by economists. Results of the survey are converted to an index, and the number reported is in comparison to the 1985 average of 100: April - 92.9; March - 88.5; February - 88.5; January - 97.7.
Retail Sales: The Census Bureau tracks consumer spending trends by watching sales of motor vehicles, clothing, building materials, electronics, restaurants, grocery stores and more. The numbers reported indicate the percentage change from only the previous month: April - 0.5 percent; March - 2 percent; February - 1 percent; January - 0.5 percent.
Consumer Inflation: The Consumer Price Index is reported by the Bureau of Labor Statistics and is used to measure inflation. A set grouping of consumables, including food, beverages, medical care, fuel and clothing are watched. The value indicates the year-over-year change in core pricing: April - 1.8 percent; March - 1.6 percent; February - 1.2 percent; January - 1.1 percent.
Gross Domestic Product (GDP): Reported by the Bureau of Economic Analysis, the GDP is an indicator of economic health. Growth over the long term is sustainable at 3.5 percent, according to economists. If the GDP shows a decline over a period of quarters, the economy is considered to be recessionary. The GDP is reported quarterly and is comprised of the value of all goods and services produced in the United States. The numbers are expressed as a percentage change from the previous quarter: Q4 2003 - 4.1 percent; Q3 2003 - 8.2 percent; Q2 2003 - 3.3 percent; Q1 2003 - 1.4 percent
The SNEWSÂ® Retail Reports: Our first reports surveying the retail climate nationwide among outdoor specialty retail appeared Jan. 19 (Click here to read) and Jan. 26 (Click here to read). Our next round of reports will appear in SNEWSÂ® in early June.
Timberland affiliates selling 3.2 million shares
The Timberland Company (NYSE: TBL), members of the Swartz family, The Swartz Foundation, A Kinder World Foundation and The HeartStone Foundation entered into an agreement on May 14 to sell 3,261,220 shares of Timberland Class A Common Stock in an underwritten offering through Merrill Lynch & Co.
Up for sale are 1 million shares by The Swartz Foundation, 160,735 shares by A Kinder World Foundation (a foundation established by David Swartz, son of Chairman Sidney Swartz), 160,735 shares by The HeartStone Foundation (a foundation established by Julie Swartz, daughter of Sidney Swartz), 833,108 shares held in trust for Julie Swartz, 606,642 shares held in trust for or directly by David Swartz and 500,000 shares held in trust for Jeffrey Swartz (president and CEO). This underwritten offering represents all remaining shares held in trust for or directly by David Swartz and Julie Swartz, neither of whom is actively involved in the management of the company.
Prior to the sale, Sidney Swartz exchanged 1,610,306 shares of Class B Common Stock for 1,658,615 shares of Class A Common Stock owned by The Sidney W. Swartz 1982 Family Trust B for Jeffrey Swartz.
The sale will support the Swartz family's philanthropic and investment diversification objectives, and is expected to close on May 19. Timberland will not receive any proceeds from the sale of these shares. Sidney Swartz, members of his family and charitable and family trusts currently hold 30 percent of the total shares outstanding and 72 percent of voting control of Timberland, and will maintain voting control following this sale. Because the shares to be sold in this underwritten offering are currently outstanding, this sale will not increase the number of the company's outstanding shares or dilute ownership of its other existing shareholders.
Sportsman's Guide to purchase 10 percent of outstanding shares
The board of directors of the Sportsman's Guide (Nasdaq: SGDE) has approved a new stock repurchase plan, which allows the company to repurchase up to 10 percent of its outstanding common stock in the open market or in privately negotiated transactions over the next 12 months. The board's actions follow last year's authorization of a plan with the same guidelines. Under the earlier plan, the Sportsman's Guide repurchased 358,594 shares at a cost of $6.3 million through March 31, 2004, at which time it had approximately 4.7 million shares outstanding. "The board and management see the current environment as an opportunity to invest a portion of our strong cash flows in our common stock at these prices," Gregory Binkley, president and CEO, said.
For more information about the companies in this financial report, as well as to view stock prices updated every 15 minutes, visit the SNEWSÂ® Stock Market Updates. Click on: www.snewsnet.com/cgi-bin/snews/stock_report.html.